The “gig” economy and “high employment” figures

…”Workers’ rights have failed to keep pace with the dismantling of the nine-to-five working week as Britain’s gig economy has more than doubled in size over three years to account for 4.7 million workers, the TUC has warned, in a study conducted with the University of Hertfordshire. “Huge numbers are being forced to take on casual and insecure platform work – often on top of other jobs,” said Frances O’Grady, general secretary of the Trades Union Congress. “But as we’ve seen with Uber too often these workers are denied their rights and are treated like disposable labour.”

Overall employment in the UK has reached a record 32.75 million following a boom in job creation since the 2008 financial crisis. But economists believe employment is also increasingly precarious, putting pressure on living standards. Poverty while in work has increased, alongside the use of food banks, and average wages after inflation remain below the level recorded before the 2008 crash. The government promised to boost workers’ rights after a landmark review of the gig economy but Brexit has left that process stalled, and unions and Labour say the measures do not go far enough. …

https://www.theguardian.com/world/2019/jun/28/friday-briefing-gig-economy-making-jobs-ever-more-tenuous?CMP=Share_iOSApp_Other

Cities (with highest wages) too expensive for young people to buy homes in

So, what happens when the towns and villages you do come from are just as expensive as Bristol (with wages in Exeter lower than those in Exeter)?

Well, in East Devon, you are mostly funnelled into Cranbrook – as that is where most so-called “Help to Buy” new homes are being built.

The national article uses an example of someone moving from East Devon to Bristol.

“More young people are getting stuck where they grew up or went to university because they cannot afford rents in places where they can earn more money, according to the Resolution Foundation thinktank. It found the number of people aged 25 to 34 starting a new job and moving home in the last year had fallen 40% over the last two decades. …

In 1997, moving from east Devon to Bristol increased median incomes by 19%, but rising rents cut that increase to 1% in 2018. …

Landlords blamed the government for failing to sufficiently increase the supply of new homes. The Residential Landlords Association (RLA) also criticised measures which appear to be encouraging landlords to sell up, including reduction in mortgage interest relief for landlords and an increase in stamp duty.

“The biggest threat to rent levels are the policies being pursued by the government which are choking off the supply of homes for private rent as demand is increasing,” said the RLA policy director, David Smith.

The findings came as the affordable housing commission released research found 43% of all renters were now facing affordability problems and that 5.5 million renters were unable to buy a home of their own.

The commission, which was established by the Smith Institute thinktank and chaired by the crossbench peer Richard Best, said that when rents or purchase costs exceeded a third of household income for those in work, it could lead to financial difficulties and these problems became critical where housing costs were 40% or more of household income.”

https://www.theguardian.com/society/2019/jun/06/high-rents-in-english-cities-forcing-young-to-stay-in-small-towns?CMP=Share_iOSApp_Other

“Ministry repeats business rates blunder despite tightened oversight”

“The government has been left red-faced – and potentially £15m out of pocket – by repeating an error which last year cost it £36m and prompted major reforms to its administration of local government finance.

Last year, the government issued a correction to its top-ups and tariffs formula, after it led to a number of business rate pilots receiving more grant than they were entitled to.

Last week, Ministry of Housing, Communities and Local Government permanent secretary Melanie Dawes wrote to the National Audit Office (NAO) admitting that the incorrect formula was used again this year after officials failed to update it.

In her letter to Sir Amyas Morse, comptroller and auditor general at the NAO, Dawes said: “We are looking into the precise circumstances of how this happened.

“However, it originated from a failure to correct the guidance following last year’s error, rather than a new mistake in our computations.”

The error, which exaggerates the forecast benefit of participating in a pilot, appeared in the formula used to calculate section 31 grant payments to business rates pilots in the ministry’s NNDR1 guidance note.

Dawes admitted some local authorities – especially those participating in a pilot for the first time this year – may have based some element of their budget planning on the incorrect formula.

She said: “Given that the financial year has already started, and particularly since the error in the guidance repeats the same mistake as last year, the secretary of state has exceptionally decided to offer a goodwill payment to those councils who used the incorrect guidance for their financial planning in 2019-20, and where the consequences of doing so could be more difficult to mitigate.”

The cost of the payments is expected to be up to £15m, according to the permanent secretary’s letter.

Pilot authorities have been asked to contact the department by 21 June if they think they would qualify for a payment.

In her letter, Dawes said that the sums involved represent the equivalent of less than 0.2% of spending power for those affected.

Last year, the government admitted that the mistake led to 27 local authorities and the Greater London Authority being over-compensated by £36m in 2018/19.

At that time, former communities secretary Sajid Javid issued a direction to allow the department to ignore the rules and allow councils to keep the cash.

In a statement to Parliament, Javid said officials would “use the corrected methodology to calculate the Section 31 grant compensation due to authorities”.

However, the department omitted to update the original guidance note, and the error was repeated in this year’s NNDR1 form, which was issued to local authorities on 17 December.

The problem came to light when the correct figures for 2019/20 were issued to pilot local authorities in late April.

The repeat of the mistake is doubly embarrassing for the government because it carried out a thorough review of governance processes relating to business rates following the original incident. …”

Ministry repeats business rates blunder despite tightened oversight

High Street trading German-style

James Timpson, chief executive of Timpson Group:

“I have just got back from Germany, where I’ve been looking for ideas to bring back to Timpson shops in this country. Germany is a good source of inspiration because the weather there is similar to ours — it rains a lot. And rain is good for cobblers. The more it rains, the more shoes wear out. If we were to open in Dubai, I doubt we would do well.

The German retail scene is different from what I see when I travel around Britain, visiting more than 1,000 of our shops each year. There were hardly any vacant sites over there, no closing-down sales — and the high streets and shopping centres were busy. I’m sure the landlords are also doing well.

The Germans are just behind us in the amount they buy online, and they have many of the same brands as our high streets. The problem in Britain is that we have way too many shops — far more than in Germany.

My company rents 95% of its shops from landlords whose aim is to get us to pay the highest rent possible. My fantastic property team battle to find evidence to prove that rents should be lower. We were on the losing side of this cat-and-mouse game for years after I joined the business in 1995. In the past four years, however, the tide has turned.

In the 40 lease renewals we have completed in the past three months, the rents have come down by an average 9.6% — and that doesn’t take into account the generous rent-free periods we’ve also pocketed. There are some shops where the rents have come down by 80%, and more than a dozen where we pay no rent at all.

You will find many retailers complaining about high rents, but you will find even more complaining about high business rates.

When I became chief executive, in 2002, I started a discipline I still abide by today, and still hate doing just as much. I go through the profit-and-loss accounts for every one of our 2,100 shops every month, looking for errors and bad performance. While I’m no accountant, it’s amazing what you can learn.

The biggest change over this time has been how much the rates bill — the amount we pay local authorities as a property tax — has gone up (business rates brought in £25bn for the government in England last year).

The rule of thumb used to be that rates made up 30% of the rent. The figure is now 44% and growing. You can see why many retailers find this difficult to afford and difficult to understand. With online shopping growing, more out-of-town retail parks popping up and consumer sentiment weak, retailers are closing shops at an alarming rate.

However, I don’t think rates are the real problem — it’s rents.

Rates are based on the value of the property. If that goes up, the rates go up. It can take some time for the figure to reflect the true value of the building — and years to be adjusted to a fair level. The lag is the problem.

The Louis Vuitton shop on London’s Bond Street saw its annual rates bill soar from £3.9m to £8.5m a couple of years ago — up 118%. The nearby Chanel shop suffered a 135% increase. The rents rose so steeply because the value of the buildings they trade from had also gone up dramatically. These prized assets come with big bills.

Because of the lag in assessing what each property is worth, many in my chain have been overpaying rates for some years. In essence, Timpson shops in less glamorous locations have been subsidising global designer brands such as Chanel. While we never look for pity, we do like to play a fair game.

Now, on to rents. As they come down, we are seeing a drop in the rates we pay. Landlords are becoming more astute in recognising that it’s often better to take a reduced rent than to receive no rent at all and be forced to pick up an “empty rates” bill on top. This process takes years to unwind — up to 10. Most leases we sign run for 10 years, with a break clause at five. Only at these two points can we challenge the landlord to get the rent down. We still don’t win them all — the rent in Nantwich went up last week!

So retailers shouldn’t worry about the rates, which they can’t control, and concentrate instead on battling with landlords to get the lowest possible rent. This will, in time, lead to lower rates.

I’m proud of the amount we pay in rates (£8.6m last year, against a rent bill of £19.3m). This money pays for our customers to drive on roads to get to the shops, for our sick colleagues to go to hospital, and for schools to educate our children.

While we may not like paying too much, our rates go a long way to help the communities who shop with us. Other retailers should think the same way.”

Source:Sunday Times (pay wall)

“The dream of free buses still lives on”

Guardian letters:

“David Walker’s recollection of South Yorkshire’s publicly subsidised public transport system (Letters, 30 May) is only part of the story.

The aim of the cheap fares was to make the bus service totally free of fares by 1984 – a hop-on, hop-off service funded through a precept on the rates and savings made from not having to collect fares.

The South Yorkshire Freedom Riders are pressing the Sheffield city region mayor Dan Jarvis, the Labour and Green parties, locally and nationally, to give serious consideration to a publicly owned and run universal basic service with a zero-fare expanded bus service. For most people it will mean a minimum of a £30 uplift in disposable income as well as removing cars from our roads and reducing levels of pollution.

Motorists are facing higher costs to force them into buses. Let’s give them a viable alternative. Let’s give everyone access to towns, villages, friends, the countryside and work. Let’s give them a free-to-use bus service as was intended by a visionary authority in 1974.

Mike Smith
South Yorkshire Freedom Riders, Barnsley”

https://www.theguardian.com/money/2019/may/30/the-dream-of-free-buses-still-lives-on?

Those optimistic “growth” figures from our LEP look even more unlikely

“Calling an organisation the “UK 2070 Commission” is not without its risks. Who cares what happens that far out?

But that, in a sense, is the point. The commission, set up to investigate Britain’s “marked regional inequalities”, publishes its first report today. And, as its chairman Lord Kerslake puts it: “If you want to understand what happens in economics, you need to look 50 years back and 50 years out.” Indeed, as the commission notes: “The reference to 2070 is an explicit recognition that the timescales for successful city and regional development are often very long, in contrast to the short-termism of political cycles.”

A Brexit-addled government nicely illustrates that — not that it’ll have been any surprise to Lord Kerslake, the ex-head of the home civil service. And in these distracted times, the report is doubly welcome. It kills the myth that inequality is not on the rise and helps to explain Brexit — or at least the disparity between Remainer London and the Brexiteer regions.

The report finds London “de-coupling from the rest of the UK”. And to nobody’s benefit. Research from Sheffield University professor Philip McCann finds the “UK is interregionally more unequal” than 28 of the 30 advanced OECD countries, the exceptions being Ireland and Slovakia.

Productivity in the capital is 50 per cent higher than the rest of the UK. Indeed, similar growth between 1992 and 2015 from cities outside London would have added at least “£120 billion to the national economy”. And, on present trends, half of the UK’s future jobs growth will be in London and the South East, which accounts for only 37 per cent of the population.

The effects show up everywhere. Healthy life expectancy in the UK’s poorest regions is “19 years lower”. The Joseph Rowntree Foundation found in 2016 that dealing with the effects of poverty costs the UK £78 billion a year. And, even then, poor is a relative term. The children’s commissioner for England found that “a child who is poor enough for free school meals in Hackney, one of London’s poorest boroughs, is still three times more likely to go on to university than an equally poor child in Hartlepool”.

No one wins from such imbalances. People and businesses in the North “miss out on the benefits of growth” — forcing more spending on benefits. But those in “overheating” London and the South East find “increasing pressures on living costs and resources”, so reducing “quality of life”. That forces spending on pricey infrastructure, exacerbating the imbalances. Hence Crossrail, a phase-one HS2 skewed to the capital and an environmentally damaging third Heathrow runway.

So, what to do? Well, here the commission suggests a mix of regional devolution and German-style national planning. It points to the eye-popping €1.5 trillion spent post-unification to help to bring east Germany up to speed with the west. For Britain, it proposes an extra £10 billion spend annually for the next 25 years: a fabulous sum equating to 0.5 per cent of GDP. Lord Kerslake says it’s for government to decide whether it would come from borrowings, tax or such things as levies on uplifts in property values.

Yet he reckons “higher regional growth rates would over time offset this cost”. He emphasises, too, that this is just an initial report, seeking feedback. And don’t the divisions over Brexit underline that Britain needs to do something? Waiting until 2070 isn’t an option.”

Source: The Times (pay wall)